10/8/2009 11:16:00 AM
Can Orange make the concession store concept work?
Mobile concessions in other retail outlets have not had the most successful track record so far. Virgin Mobile within Virgin Megastores was a natural marriage, but 3’s attempt to establish mobile concession areas within Superdrug outlets ended in failure. This has not deterred Orange, which has already set up concessions in HMV stores, and has now expanded the idea with the launch of a strategic partnership with Asda.
You can see the logic. Customers want to hear music, play games and watch films and TV on their phones. HMV is a perfect link up for the high-end customer wanting to maximise the use of the new generation of smartphones.
The deal with Asda addresses the lower income segment of the mobile market with the £5 tariff offer well to the fore. What’s needed to make this concession a success is volume, and Asda’s Eastlands store in Manchester attracts 100,000 shoppers per week. Orange only needs to collar a small fraction of this flood of people to keep its staff busy.
So will concessions in other retailers work for Orange? The operator’s ambition is to have 420 stores by the end of the year. Concessions are certainly a quick way to help achieve that goal. Orange has been careful to say that the concessions are trials. But it must be confident that the HMV format is working, as it says it will have around 20 Orange-HMV concessions ready by Christmas.
The Asda partnership certainly seems to have potential, but as the commercial arrangements are confidential it’ll be difficult to know whether Orange can make it pay, especially as it is dealing with the less lucrative end of the market. It could prove a canny move by Orange. If the Asda trial works, it’ll be a jump ahead of its rivals. And if it doesn’t, it can retreat without having incurred massive costs.